CF Industries (CF) Hits New 52-Week High on Bright Prospects

Shares of CF Industries Holdings, Inc.CF scaled a fresh 52-week high of $45 on Mar 6, before closing the day at $43.20.

CF Industries has a market cap of roughly $10.1 billion. Average volume of shares traded in the last three months is around 3,321.5K. The company has an expected long-term EPS growth rate of 8%.

The stock has rallied 10% in the past three months, outperforming the industry’s 4.8% growth.

Driving Factors

Better-than-expected fourth-quarter 2017 earnings performance and a positive outlook have been driving the stock lately.

CF Industries swung to a profit in the fourth quarter aided by a sizable tax benefit. The company logged a profit of $465 million or $1.98 per share in the quarter against a loss of $320 million or $1.38 per share a year ago. Adjusted loss came in at 2 cents per share for the fourth quarter, which was narrower than the Zacks Consensus Estimate of a loss of 11 cents.

The company expects higher energy costs in major producing regions, lower production in China, a weaker U.S. dollar, increased oil and freight costs and a steady global demand to support nitrogen prices during first-half 2018 at levels higher than the comparable period a year ago.

CF Industries benefits from higher nitrogen demand driven by healthy corn plantations and cyclical recovery in the nitrogen fertilizer industry. The company expects India and Brazil to be major drivers for urea demand in 2018. Based on the company’s analysis and published reports, India is expected to require the import of 500,000-1,000,000 metric tons of urea prior to end of March to meet its fertilizer requirements for this year.

Brazil also imported roughly 5.4 million metric tons of urea in 2017, up 15% year over year, and has emerged as a major importer of the nutrient. Import demand is also expected to be healthy in North America in 2018.

CF Industries should also benefit from its efforts to boost production capacity. The company completed a new 400,000-ton urea equivalent per year DEF unit at the Donaldsonville complex in 2017 to support the growth of its diesel fluid business.

Steel Dynamics has an expected long-term earnings growth rate of 12%. Its shares have soared 37.3% over the last six months.

Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have moved up 53% over the past six months.

U.S. Steel has an expected long-term earnings growth rate of 8%. Its shares have rallied 65.2% over the last six months.

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